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The government is struggling to hold back a wave of foreclosure "rescue” scams arising from the growing number of homeowners facing the loss of their homes. It may be fighting a losing battle.

On Monday, Treasury Secretary Timothy Geithner declared war on the con artists who prey on borrowers desperate to find a way to keep their homes.

"American homeowners have been through enough in the past few years," Geithner said, adding that the last thing they need is to get scammed as they struggle to keep their homes.

"These predatory scams callously rob Americans of their savings and potentially their homes," he said. "We will shut down fraudulent companies more quickly than before. We will target companies that otherwise would have gone unnoticed under the radar."

But as the problem spreads, regulators and prosecutors seeking to crack down on these scams seem to be fighting a forest fire with a garden hose.

Some 3 million households have already lost their homes to foreclosure. As of Jan. 30, 2.9 million people were 60 days or more past due on their mortgages, one out of 10 were delinquent, according to the government’s Hope Now Alliance. Another 6 million households are expected to face foreclosure in the next several years, according to private estimates.

The Federal Trade Commission has sent warning letters to 71 companies it says were running suspicious advertisements and has filed five new civil cases to halt illegal loan modification scams. Attorney General Eric Holder says the FBI is investigating about 2,100 mortgage fraud cases.

"If you discriminate against borrowers or prey on vulnerable homeowners with fraudulent mortgage schemes, we will find you, and we will punish you," Holder said.

Over the past year homeowners have been flooding state attorneys general with complaints about for-profit loan modification consultants. While some of these outfits are legitimate, authorities say many are con artists.

Potential victims are easily identified: various filings, including "pre-foreclosure" notices, are public records, providing all the details a would-be scammer needs to target fraud victims. Many snare victims via Web sites promising quick fixes over the phone.

The scams take several forms but usually involves payment of an upfront fee in exchange for a promise to resolve a pending foreclosure. Some of these foreclosure "counselors" simply pocket the fee, usually a month’s mortgage payment, with little or no further contact with the distressed homeowner. Others compound the fraud by convincing the homeowner to sign over the deed or present forged documents purporting to show the foreclosure has been set aside.

Some scammers will file a bankruptcy in the homeowner's name without consent or knowledge. While bankruptcy usually stops a foreclosure temporarily, this form of the scam adds insult to injury by leaving the homeowner with additional legal costs and the burden of a credit record that will make it difficult to buy or rent a new home for up to 10 years.

Monday’s joint announcement by the Treasury, The Department of Justice, the Department of Housing and Urban Development, the Federal Trade Commission and the Illinois Attorney General provided homeowners with a high-profile warning to avoid foreclosure rescue scams and a pledge to better coordinate government efforts to stop them.

The government’s Financial Crimes Enforcement Network reported in February that banks and other lenders filed some 62,000 so-called Suspicious Activity Reports relating to a wide variety of mortgage frauds during the 12 months ended in July, 2008. That's a 44 percent increase over the preceding year.

Despite the widespread publicity and broad economic damage inflicted by mortgage fraud over the past several years, efforts to thwart scams have fallen far short. Part of the problem lies in the fractured regulatory structure tasked with combating mortgage fraud. Of those 62,000 reports of possible mortgage fraud, the Office of Thrift Supervision handled 47 percent, The Office of the Comptroller of the Currency handled 36 percent and the rest went to the Federal Reserve, the Federal Deposit Insurance Corp. and the National Credit Union.

The Federal Trade Commission also enforces various consumer protection laws as part of a broad portfolio of regulatory oversight that includes unfair trade practices and antitrust reviews. Over the years, its staffing has not kept up with the overall growth of the economy and population. The agency’s new chairman, Jon Leibowitz, recently testified that the FTC has about 1,100 full time employees, down from about 1,800 in 1980.

While Washington's attention recently has focused on a broad overhaul of financial regulations, efforts to tighten consumer protection laws against mortgage fraud have moved slowly. Last year, Sen. Herb Kohl, D-Wis., introduced a Senate bill to protect victims of foreclosure rescue scams. The bill died in the Senate Banking Committee.

The surge in foreclosure rescue fraud mirrors the ongoing rise in foreclosures, a trend that has proved stubbornly resistant to public and private efforts. Over a year ago, the Bush administration established the Hope Now Alliance to prod lenders to negotiate voluntary loan modifications with troubled homeowners. Though the group says it has helped several million homeowners work out new terms and payment plans, the results have been disappointing. In some cases, monthly payments increased under these new payment plans. In December, the Office of the Comptroller of the Currency issued a report noting that more than half of those modifications left homeowners facing foreclosure again within six months.

But the national attention provided a boon to foreclosure rescue scammers. Last month, the FTC shut down a New Jersey-based company called Hope Now Modifications that claimed affiliation with the widely publicized Hope Now Alliance. According to the complaint, callers to the company’s telemarketers were promised loan modifications and told they could avoid foreclosure in return for a “mitigation escrow fee.” After paying the fees, consumers either didn’t hear back or were told negotiations with lenders were proceeding smoothly. Some homeowners later found out their lender hadn’t been contacted. Those who complained to the company and asked for a refund didn’t get their money back, the FTC said.

But the case demonstrates the difficulty regulators and prosecutors have shutting down these operations. A New Jersey judge issued a restraining order against Hope Now Modifications and the site was shut down. But later that day, Leibowitz told a congressional hearing last month, the site “popped up again under a Web site registered in Germany” and was shut down again.

“So we have a little long-arm problem in terms of asserting our jurisdiction,” Leibowitz said.

Some of those offering to help distressed homeowners are former brokers, agents and appraisers who've seen their previous business evaporate after the housing market collapsed under an avalanche of rogue lending many of them participated in. Some foreclosure consultants offer legitimate services. But it's not clear whether paid advice is more effective than the help available to homeowners from nonprofit credit counselors who also work with lenders at no charge.

Neighborworks America, a national housing advocacy group, filed two trademark complaints last month with online search engines to prevent companies from using the group's name and logo to promote foreclosure rescue schemes.

One company offering referrals for a variety of financial services is riding the coattails of the Treasury’s Web site, www.financialstability.gov , which Treasury Secretary Geithner touted in Monday’s announcement. The official site is devoted to the government’s various efforts to bail out the financial system and help homeowners avoid foreclosure. Web surfers who navigate to the unrelated www.financialstability.org are referred to dozens of links purporting to help consumers “Get out of Debt,” “Stop Foreclosure Now” and get “Payday Loans in 1 hour.”

According to Whois.net, financialstability.org is registered to Admin Search Marketing, Ltd, based in Tortola in the British Virgin Islands. A company representative was not immediately available for comment.

In most cases, prosecutors who catch foreclosures rescue scammers opt for civil actions aimed at recovering money for bilked consumers. Few cases result in criminal penalties.

That may be changing as state attorneys general begin gearing up to go after the latest wave of mortgage fraud. This year, Arizona Attorney General Terry Goddard brought three cases charging felony theft, fraud and money laundering. Two defendants pleaded guilty; a third case is pending. California’s attorney general won convictions last year against three people who stole more than $700,000 in upfront fees of $1,500 to $5,000; those sentences ranged from probation to six years in prison.